Microsoft has always positioned Hyper-V to be a less expensive alternative to VMware. Now the software giant says that with VMware's new VRAM-based pricing, it calculates a private cloud built on Microsoft can cost up to $70,000 less than one built under VMware's licensing schemes.

The calculations are based using a two-node cluster hosting three VMs per processor (a total of 12 VMs in the cluster). Microsoft says a private cloud built on WindowsServer 2008 R2, Hyper-V and System Center will cost $18,480 using Microsoft products. The same configuration will cost VMware customers $72,918, Microsoft says. For higher-density VMs, 6 per processor/24 per server, Microsoft says its costs won't change, but VMware will charge $95,790.

These prices are based on a lot of configuration assumptions, including Windows Server 2008 R2. The whitepaper says:

"If this scenario is licensed through Microsoft ECI Datacenter

You'll require four ECI Datacenter licenses (as there are a total of four physical processors) and the two hosts can run three VMs per processor (a total of 12 VMs in the cluster).

You'll not need to pay separate licensing fee for each VM running in your environment, as ECI Datacenter edition includes Windows Server Datacenter, which supports unlimited virtualization rights. This means that you have the use rights to run an unlimited number of virtualized instances of Windows Server on processors licensed with Windows Server Datacenter without purchasing additional licenses. Similarly ECI Datacenter includes System Center SMSD, which supports management for unlimited number of VMs.

At the 24 VM density rate, Microsoft calculates the separate licensing fees for vCenter Operations, SRM, vShield, and vCloud to be $1,906 multiplied by 24, hence the hefty increase in price.

But we are talking vendor math here, and Microsoft admits that the licensing assumptions are not available in the real world. The cost-saving ECI Datacenter license can only be had for environments with 50 or more physical processors. The VMware Cloud Infrastructure Suite products are sold in packs of 25 VMs each.

VMware could not be reached for comment.

Will this new batch of low-cost claims convince VMware customers to switch to Microsoft? VMware customers have always responded with a you-get-what-you-pay-for attitude. However, Microsoft says that it now offers much-improved management too. With the promised support of Xen in Systems Center 2012, Microsoft says its system management tools will support more hypervisors than VMware's tools, says Edwin Yuen, Director of Cloud and Virtualization Strategy. These are Hyper-V, XenServer, VMware ESX/ESXi, and, eventually, Xen. Hyper-V also supports Windows and has certified three Linux flavors (RedHat, SUSE, CentOS).

VMware hasn't ignored Hyper-V. It's new vCenter XVP Manager and Converter (XVP) is used to manage Hyper-V Servers and Windows 2008 Servers and to perform conversions to vSphere too.

The whitepaper relies on other up-and-coming features of System Center 2012, to make its case against VMware's Cloud Infrastructure Suite. For instance, it describes the "service template" which allows system administrators to attach configuration and performance thresholds to applications. However, Yuen insists that System Center 2010 is fully capable of supporting application-level monitoring in a private cloud infrastructure today.